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Chapter 2
A key aspect of this is to understand which features of the product are essential to
customer perceived quality and which are not.
This process is known as ‘value analysis’.
Attention should be focused more on reducing the costs of features perceived by the
customer not to add value.
Closing the cost gap by increasing the selling price is not a viable
option as the price is determined by market forces rather than the
company.
Illustrations and further practice
Now try TYU 4, ‘Target Costing’.
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